Recently, in a comment on my short piece, “The Libertarian Road to Egalitarianism,” philosopher and prominent libertarian Tibor R. Machan cited George Orwell’s Animal Farm as an example of what happens when we attempt to do something about inequality. To Machan, inequality is a “fabricated problem,” and Orwell’s fairy story is a cautionary tale on the dangers of trying to remedy it.

Upon reading his comment, I was somewhat nonplussed, for it had never occurred to me to read Animal Farm in such a way. Indeed, since reading the novel for the first time, I have understood it to offer a warning almost antithetical to that of Machan’s reading.

It seemed to me then, as now, that Orwell’s Animal Farm in fact counsels on the problems with inequality, the results of granting special rights and privileges to some politically connected ruling class. Orwell skillfully illustrates the fundamental problem with political authority, its inherent conflict, that confronted with the incentives which favor abuses of power, lofty philosophical ideals are readily discarded. Orwell’s whole point is that the pigs never actually take their rhetoric about equality and reestablishing the farm on fairer terms seriously — that they almost immediately begin to take advantage of their distinctly unequal position on the farm to exploit the rest of the animals and hoard the luxuries for their own private use and enjoyment.

Animal Farm thus succinctly demonstrates the connection between political power and economic power. When inequality in the former is instituted as a matter of legal fact, inequality in the latter follows unavoidably. Free market libertarians are often uncomfortable with the left’s condemnations of economic inequality, arguing that in principle libertarianism can take no issue with inequality itself.

After all, if we favor individual rights, open competition, and private property, we ought to accept whatever results they yield. Strictly speaking, that’s all true enough. It seems to me, however, that a thoroughgoing libertarian critique of society as it is today must include a critique of economic inequality as a symptom of the lack of economic freedom and the persistent interferences of political power to favor and enrich a rich elite. In his biographical study of Thomas Hodgskin, historian David Stack describes Hodgskin’s belief that “the worker could be liberated by the full application of bourgeois morality.”

For Hodgskin, Stack writes, “Inequality and misery, social order and the anti-peace” were all functions of the law, artificially imposed and not the result of “any inherent inequalities in the system of production.” If existing economic injustices flowed from the operation of positive law, then “socialist strictures against laissez faire were mistaken.” Hodgskin lived and wrote in a time when it was easier to articulate a view that was both liberal and socialist. The underappreciated legacy of thinkers like Hodgskin makes the case (frequently made at the Center for a Stateless Society today) that libertarians ought to be wary of embracing the term “capitalism,” and trumpeting it as a thing that we favor.

Like Hodgskin, today’s market anarchists do not object to the mere fact that capital is compensated for its part in the process of production. The worry — which can only finally be allayed by observing a now hypothetical free market and finding out — is that capital is overcompensated due to a position of privilege which the State confers on it. “One is almost tempted to believe,” wrote Hodgskin, “that capital is a sort of cabalistic word, like Church or State, or any other of those general terms which are invented by those who fleece the rest of mankind to conceal the hand that shears them.

It is a sort of idol before which men are called upon to prostrate themselves . . . .” Among Hodgskin’s central insights, habitually overlooked by most free marketers, is the idea that the fact of exchange in and of itself does not prove the absence of exploitation. Unequal exchange is exploitative insofar as one party to the exchange has an unfair advantage, one gained from the coercive prevention or restriction of competition. Considered on the micro level, unequal exchange might manifest in, for example, the employment relationship or an agreement for consumer goods or services. On a larger scale, unequal exchange analyses may aid our understanding of the way that the poor, developing world interacts economically with the rich and developed West.

​In the world of Animal Farm, the pigs employed violence as a way to preserve their position of power; the other animals worked increasingly long hours for less and less, with the pigs ruling as lords of Animal Farm — the name of which was eventually changed back to its original name, Manor Farm. The original mantra, “All animals are equal,” is gradually, almost imperceptibly supplanted by the idea that “some animals are more equal than others.” Machan’s interpretation of Animal Farm forgets that Orwell was a socialist, and as Orwell scholar Craig L. Carr observes, the famous novel is straightforwardly warning about the “betrayal of the egalitarian ideal.”

Following the pigs’ revolution, the ouster of Mr. Jones, “[a]n economic system that legitimates material inequality remained in place.” Orwell is interested in the use of language. In all his work, including Animal Farm, political fustian is the mechanism through which the noble goals of the revolution are “rendered consistent with the privilege and superior position of the upper class.” The language of libertarianism and free markets is analogously important to the beneficiaries of economic privilege. Without it, people would recognize corporate power for what it is, a creation of political violence and coercion, a class system as real, observable and quantifiable as any before it.

Criticizing inequality ought to be important to libertarianism to the extent that we take our own free market ideas seriously and see the political economy of today as far removed from our model. Libertarians should accordingly welcome socialism and class analysis as found in the work of leftists like Hodgskin and Orwell. It’s time we start emphasizing liberty and equality, not liberty or equality.

David S. D'Amato is the Benjamin R. Tucker Distinguished Research Scholar in Anarchist Economic Theory at the Center for a Stateless Society. D'Amato is an attorney and holds a J.D. from New England School of Law and an LL.M. in Global Law and Technology from Suffolk University Law School. A Boston native, D'Amato now lives and writes in Chicago, Illinois.